LLW2601 NOTES WITH
QUESTIONS AND ANSWERS
Joseph
0784683517
,STUDY UNIT 1: THE EMPLOYEE AND THE IMPACT OF COMMON LAW ON THE CONTRACT OF EMPLOYMENT
KEY CONCEPTS TO LOOK OUT FOR IN THE UNIT
• employee
• employer
• labour broker
• independent contractor
• control test
• organisation test
• dominant impression test
• illegal workers
• the common law
• contract of employment
• breach of contract
• restraint of trade
• termination of contract
• vicarious liability
➢ Employee
According to the LRA, BCEA, EEA and SDA, an employee is
(a) Any person, excluding an independent contractor, who works for another person or for the State and who receives or is
entitled to receive any remuneration and
(b) Any other person who in any manner assists in carrying on or conducting the business of an employer.
Guidelines to distinguish between employees and independent contractors
➢ Control test
The test looks at the control over the work the person does, the manner in which the work must be done and when the work
must be done.
➢ Organisation test
This test looks at whether the person is part and parcel of the business. The person’s work is integrated into the business of the
employer and is not just an accessory to the business.
➢ Dominant impression test
This test is favoured by the courts and considers the employment relationship as a whole, rather than concentrating on only one
factor.
Categories of employees
Part of the application of the dominant impression test
Categories of employee Description
Permanent employee • The person is employed for an indefinite period.
Temporary/ contract/fixed-term • The person is employed for a specific period or for a specific project.
employee
Casual employee • The person works for the same employer on not more than three days per week.
• The person’s employment can either be temporary or permanent.
Part-time employee • The person works for the employer only at certain times of the day, for example,
mornings or at night time.
• The person works on certain days of the week, mostly limited to three days per
week.
• The person’s employment can either be temporary or permanent.
➢ Illegal workers
Even though an illegal worker is not entitled to any protection under the LRA, he or she may still be protected by sections 23 and
10 of the Constitution. In addition, the employer who employs an illegal foreigner may not refuse to remunerate that worker on
the basis that the worker is an illegal foreigner. If the employer fails to pay such a worker the worker can approach a court of law
to enforce his or her contractual rights against the employer.
Statutory exclusion of workers
The following employees are excluding from the scope of the definition of employee in the LRA:
• Members of the National Defence Force.
, • Members of the National Intelligence Agency.
• Members of the South African Secret Service.
• Members of the South African national Academy of Intelligence.
• Members of Comsec.
The following employees are excluding from the scope of the definition of employee in the BCEA:
• Unpaid volunteers working for charitable organisations or organisations with a public purpose.
• People employed on vessels at sea.
➢ Employer
Existing legislation does not provide a definition for an employer. An employer can be defined as:
• Any person or body which employs any person in exchange for remuneration and
• Any person who permits any person to assist him or her in conducting his or her business.
➢ Labour broker
A labour broker is deemed to be the ‘employer’ of a person whose services have been obtained for, or provided to, a client for
reward.
➢ Independent contractor
An independent contractor is contracted to perform a specific task or to produce a specific result, while an employee is
appointed to render personal services in terms of a job description.
Duties of the employer and employee
Employer and employee duties flow from the contract of employment, labour legislation, the common law and collective
agreements. The primary duty of the employee is to make his or her services available to the employer and the duty of the
employer is to remunerate the employee for making his or her services available to the employer.
It is therefore important to understand that it is not necessary for the employee to perform actual work in order to receive
remuneration.
• Duties of employer
o To remunerate the employee
The primary duty of the employer is to pay the employee, and if the employee does not work, no pay is due.
The BCEA does however provide for paid leave in certain circumstances.
o To provide the employee with work
The employer is generally not required to provide the employee with work to do except in certain
circumstances, such as where the employee’s salary is commission-based and dependant on actual work done,
or where the employee’s success is dependant on the performance of certain duties on a regular basis e.g. an
actor.
o To provide safe working conditions
This duty entails that the employer may, depending on the nature and scope of work or workplace, have to
provide the employee with protective devices, install safety equipment and exercise proper supervision.
o To deal fairly with the employee
This duty is captured by the constitutional right to fair labour practices.
• Duties of employees
o To render services to the employer
This is the primary duty of an employee, whereby the employee’s labour potential is placed at the disposal of
the employer.
o To work competently and diligently
When the employee enters into the employment contract with the employer, he/she guarantees that he/she
is capable of doing the work, and that it will be performed competently and diligently.
o To obey lawful and reasonable instructions
The employee is under the control and authority of the employer. Non-compliance of this duty will constitute
serious insubordination and breach of contract, except if the employee refuses to follow orders outside the
scope of the employment contract.
o To serve the employer’s interests and act in good faith (fiduciary duty)
An employment relationship is built on trust and confidence, and this is an implicit term of an employment
contract, which includes the duty not to work against the employer’s interests and not to compete with the
employer.
➢ Vicarious liability
In terms of this doctrine the employer may be held liable for the wrongful acts or omissions of the employee committed during
the course of the employee’s employment, provided certain requirements have been met.
Requirements that must be met in order for the employer to be held liable for the employee’s wrongful conduct:
• There must be a contract of employment.
• The employee must have acted in the course and scope of employment.
• The employee must have committed a delict. (e.g. third party damages)
➢ The common law
, A contract of employment just like any other type of contract is regulated by common law. Note should be taken that in cases
where a specific labour matter is not covered by the LRA or any other labour legislation the common law will apply.
➢ Contract of employment
In order for a contract of employment to be valid, parties to the contract must have satisfied all the following common law
requirements for the conclusion of a valid contract:
• Both parties must agree
• Have capacity to enter into the contract
• The contract must be lawful
• Possible to perform
• Where there are formalities agreed upon by the parties, all those formalities must have been satisfied.
The law does not require the contract of employment to be in writing.
➢ Breach of contract
In the event of breach of contract the innocent party has a choice either to accept the breach and cancel the contract, or to
compel the defaulting party to perform. In addition the innocent party can claim damages. Breach of contract by an employer
could lead to unfair labour practise, unfair discrimination, or an unfair dismissal. Where an employee breaches a contract, it
could lead to misconduct. An employee can claim breach of contract through the High Court, which will have jurisdiction and not
the Labour Court and only common-law remedies will be available. This route will deal with lawfulness and not fairness.
➢ Restraint of trade
The purpose of a restraint-of-trade agreement is to protect the employer’s trade secrets, goodwill and business connections. It
prevents the employee from competing with his or her employer within a defined area and for a prescribed period. In
determining whether a restraint-of-trade is enforceable, a court will balance the following;
The public interest, which requires parties to comply with contractual obligations even if these are unreasonable or unfair
VS
The right of all persons to be permitted as far as possible to engage in commerce or the professions of their own choice.
Questions to determine reasonableness:
• Is there and interest deserving of protection at the termination of the agreement?
• Is that being prejudiced?
• If so, how does that interest weigh up against the interests of the other party not to work?
• Is there another facet of public policy apart from the relationship between the parties, which requires that the restraint
should either be enforced or disallowed?
• Is the restraint wider than is necessary to protect the protectable interest?
Changes to terms and conditions of employment
There are a number of ways in which the terms of an employment contract can be changed by the parties to the contract.
Neither of the parties, especially the employer, cannot arbitrarily change the terms of the contract of employment.
It can only be changed in the following ways:
• By agreement between the employer and employees or in line with the method prescribed in the contract of
employment.
• By means of a collective agreement between the employer and employee.
• By operation of law, the BCEA.
• Through a sectoral determination issued by the Minister.
➢ Termination of contract
A contract between an employer and employee terminates in the following instances:
• Contract terminates on death of employee.
• Expiry of period of service in contract.
• Insolvency of employer.
• Mutual agreement.
• Resignation of employee.
• Retirement of employee.
1.5 PRACTICAL QUESTIONS
Question 1
Draw a distinction between an employee and independent contractor. In your answer you must discuss the three different tests
used by the courts and what they entail.
Did you remember the following in your answer?
An independent contractor is contracted to perform a specified job or task or to produce a specified result, may perform the task
through others, must perform within a certain period and his or her contract terminates on completion of work he or she was
contracted to do or on expiry of the given time. The employee, on the other hand, is contracted to render personal services to the
employer, the employer may choose when to use the employee, and the contract expires on death of the employee or on expiry
QUESTIONS AND ANSWERS
Joseph
0784683517
,STUDY UNIT 1: THE EMPLOYEE AND THE IMPACT OF COMMON LAW ON THE CONTRACT OF EMPLOYMENT
KEY CONCEPTS TO LOOK OUT FOR IN THE UNIT
• employee
• employer
• labour broker
• independent contractor
• control test
• organisation test
• dominant impression test
• illegal workers
• the common law
• contract of employment
• breach of contract
• restraint of trade
• termination of contract
• vicarious liability
➢ Employee
According to the LRA, BCEA, EEA and SDA, an employee is
(a) Any person, excluding an independent contractor, who works for another person or for the State and who receives or is
entitled to receive any remuneration and
(b) Any other person who in any manner assists in carrying on or conducting the business of an employer.
Guidelines to distinguish between employees and independent contractors
➢ Control test
The test looks at the control over the work the person does, the manner in which the work must be done and when the work
must be done.
➢ Organisation test
This test looks at whether the person is part and parcel of the business. The person’s work is integrated into the business of the
employer and is not just an accessory to the business.
➢ Dominant impression test
This test is favoured by the courts and considers the employment relationship as a whole, rather than concentrating on only one
factor.
Categories of employees
Part of the application of the dominant impression test
Categories of employee Description
Permanent employee • The person is employed for an indefinite period.
Temporary/ contract/fixed-term • The person is employed for a specific period or for a specific project.
employee
Casual employee • The person works for the same employer on not more than three days per week.
• The person’s employment can either be temporary or permanent.
Part-time employee • The person works for the employer only at certain times of the day, for example,
mornings or at night time.
• The person works on certain days of the week, mostly limited to three days per
week.
• The person’s employment can either be temporary or permanent.
➢ Illegal workers
Even though an illegal worker is not entitled to any protection under the LRA, he or she may still be protected by sections 23 and
10 of the Constitution. In addition, the employer who employs an illegal foreigner may not refuse to remunerate that worker on
the basis that the worker is an illegal foreigner. If the employer fails to pay such a worker the worker can approach a court of law
to enforce his or her contractual rights against the employer.
Statutory exclusion of workers
The following employees are excluding from the scope of the definition of employee in the LRA:
• Members of the National Defence Force.
, • Members of the National Intelligence Agency.
• Members of the South African Secret Service.
• Members of the South African national Academy of Intelligence.
• Members of Comsec.
The following employees are excluding from the scope of the definition of employee in the BCEA:
• Unpaid volunteers working for charitable organisations or organisations with a public purpose.
• People employed on vessels at sea.
➢ Employer
Existing legislation does not provide a definition for an employer. An employer can be defined as:
• Any person or body which employs any person in exchange for remuneration and
• Any person who permits any person to assist him or her in conducting his or her business.
➢ Labour broker
A labour broker is deemed to be the ‘employer’ of a person whose services have been obtained for, or provided to, a client for
reward.
➢ Independent contractor
An independent contractor is contracted to perform a specific task or to produce a specific result, while an employee is
appointed to render personal services in terms of a job description.
Duties of the employer and employee
Employer and employee duties flow from the contract of employment, labour legislation, the common law and collective
agreements. The primary duty of the employee is to make his or her services available to the employer and the duty of the
employer is to remunerate the employee for making his or her services available to the employer.
It is therefore important to understand that it is not necessary for the employee to perform actual work in order to receive
remuneration.
• Duties of employer
o To remunerate the employee
The primary duty of the employer is to pay the employee, and if the employee does not work, no pay is due.
The BCEA does however provide for paid leave in certain circumstances.
o To provide the employee with work
The employer is generally not required to provide the employee with work to do except in certain
circumstances, such as where the employee’s salary is commission-based and dependant on actual work done,
or where the employee’s success is dependant on the performance of certain duties on a regular basis e.g. an
actor.
o To provide safe working conditions
This duty entails that the employer may, depending on the nature and scope of work or workplace, have to
provide the employee with protective devices, install safety equipment and exercise proper supervision.
o To deal fairly with the employee
This duty is captured by the constitutional right to fair labour practices.
• Duties of employees
o To render services to the employer
This is the primary duty of an employee, whereby the employee’s labour potential is placed at the disposal of
the employer.
o To work competently and diligently
When the employee enters into the employment contract with the employer, he/she guarantees that he/she
is capable of doing the work, and that it will be performed competently and diligently.
o To obey lawful and reasonable instructions
The employee is under the control and authority of the employer. Non-compliance of this duty will constitute
serious insubordination and breach of contract, except if the employee refuses to follow orders outside the
scope of the employment contract.
o To serve the employer’s interests and act in good faith (fiduciary duty)
An employment relationship is built on trust and confidence, and this is an implicit term of an employment
contract, which includes the duty not to work against the employer’s interests and not to compete with the
employer.
➢ Vicarious liability
In terms of this doctrine the employer may be held liable for the wrongful acts or omissions of the employee committed during
the course of the employee’s employment, provided certain requirements have been met.
Requirements that must be met in order for the employer to be held liable for the employee’s wrongful conduct:
• There must be a contract of employment.
• The employee must have acted in the course and scope of employment.
• The employee must have committed a delict. (e.g. third party damages)
➢ The common law
, A contract of employment just like any other type of contract is regulated by common law. Note should be taken that in cases
where a specific labour matter is not covered by the LRA or any other labour legislation the common law will apply.
➢ Contract of employment
In order for a contract of employment to be valid, parties to the contract must have satisfied all the following common law
requirements for the conclusion of a valid contract:
• Both parties must agree
• Have capacity to enter into the contract
• The contract must be lawful
• Possible to perform
• Where there are formalities agreed upon by the parties, all those formalities must have been satisfied.
The law does not require the contract of employment to be in writing.
➢ Breach of contract
In the event of breach of contract the innocent party has a choice either to accept the breach and cancel the contract, or to
compel the defaulting party to perform. In addition the innocent party can claim damages. Breach of contract by an employer
could lead to unfair labour practise, unfair discrimination, or an unfair dismissal. Where an employee breaches a contract, it
could lead to misconduct. An employee can claim breach of contract through the High Court, which will have jurisdiction and not
the Labour Court and only common-law remedies will be available. This route will deal with lawfulness and not fairness.
➢ Restraint of trade
The purpose of a restraint-of-trade agreement is to protect the employer’s trade secrets, goodwill and business connections. It
prevents the employee from competing with his or her employer within a defined area and for a prescribed period. In
determining whether a restraint-of-trade is enforceable, a court will balance the following;
The public interest, which requires parties to comply with contractual obligations even if these are unreasonable or unfair
VS
The right of all persons to be permitted as far as possible to engage in commerce or the professions of their own choice.
Questions to determine reasonableness:
• Is there and interest deserving of protection at the termination of the agreement?
• Is that being prejudiced?
• If so, how does that interest weigh up against the interests of the other party not to work?
• Is there another facet of public policy apart from the relationship between the parties, which requires that the restraint
should either be enforced or disallowed?
• Is the restraint wider than is necessary to protect the protectable interest?
Changes to terms and conditions of employment
There are a number of ways in which the terms of an employment contract can be changed by the parties to the contract.
Neither of the parties, especially the employer, cannot arbitrarily change the terms of the contract of employment.
It can only be changed in the following ways:
• By agreement between the employer and employees or in line with the method prescribed in the contract of
employment.
• By means of a collective agreement between the employer and employee.
• By operation of law, the BCEA.
• Through a sectoral determination issued by the Minister.
➢ Termination of contract
A contract between an employer and employee terminates in the following instances:
• Contract terminates on death of employee.
• Expiry of period of service in contract.
• Insolvency of employer.
• Mutual agreement.
• Resignation of employee.
• Retirement of employee.
1.5 PRACTICAL QUESTIONS
Question 1
Draw a distinction between an employee and independent contractor. In your answer you must discuss the three different tests
used by the courts and what they entail.
Did you remember the following in your answer?
An independent contractor is contracted to perform a specified job or task or to produce a specified result, may perform the task
through others, must perform within a certain period and his or her contract terminates on completion of work he or she was
contracted to do or on expiry of the given time. The employee, on the other hand, is contracted to render personal services to the
employer, the employer may choose when to use the employee, and the contract expires on death of the employee or on expiry
